International Quantum Epitaxy plc

(Semi Conductor Industry)

Market support for this stock appears to be in the 15 ==> 15.75 range (GBX).

Positives;

Development of strained silicon technology allows for smaller and faster micro chip technology. This is being sampled and tested and Q1 results for 2004 will be able in March 04. If succesful I reckon sales will greatly improve in this division. (However the likes of INTEL and IBM are developing in-house).

Losses have been cut with possible breakeven by Q1 2005.

The sector in general is lively with demand from mobile phone manufacturers

Negatives;

Fibre Optics division struggling

Strong dollar hits US sales (although partially off set by lower raw materials cost.

Overall I think that the Q1 04 results will be key (especially for strained silicon) and if they are positive along with some contract wins, market support for the stock could be in the 18 ==> 20 range by Q2 04.

Any views on this stock and the sector in general would be appreciated. DYOR.

News (Taken from their website)
19 January 2004
Pre-close Trading Update

IQE plc, a leading global outsource manufacturer of advanced semiconductor
wafers, is pleased to provide an update on trading following its successful
placing and open offer in November 2003.

Drew Nelson, Chief Executive, commented; 'Although trading in Q4 remained
difficult and revenue will be adversely affected by the significant weakness of
the dollar, the Group has been successful in continuing to develop new business
opportunities which should impact favourably during 2004.'

IQE Europe

The first production quantities of optoelectronic wafers for a major Far East CD
manufacturer, following successful qualification, are now being shipped.
Shipments of DVD laser wafers to two other major OEM suppliers has also
continued and further qualifications relating to these products are in progress.
IQE Europe has successfully qualified its high power laser wafer products with
one of the largest industrial laser manufacturers and qualifications with other
manufacturers serving this segment are also underway. Opportunities for other
opto products in VCSELs (short distance communications), sensing and imaging,
LEDs and optical communications continue to build.

IQE Silicon

The first results from IC circuit performance on IQE Strained Silicon Wafers
processed through a leading edge chip manufacturer are expected by the end of
March 2004. Two other major IC chip houses have recently committed to process
IQE Strained Silicon through their most advanced chip processes, bringing the
total number of manufacturers evaluating IQE's generic product, to four. In
addition, one of these key players has committed to two new programmes involving
variants of Strained Silicon processes with IQE.

IQE Inc

Despite some recent softness in the wireless sector, one of IQE's key customers
has just won a major contract and as a result is forecasting to substantially
increase its requirement for wafers from Q1 2004 onwards. Another customer has
recently reported an upturn in business. However, the continued weakening of the
US dollar impacts adversely on sales by IQE Inc, although this is offset
somewhat by a favourable impact on raw material prices. The variability of
orders in this business as customers win or lose significant contracts from the
major mobile phone manufacturers, continues to make short term forecasting
difficult which in turn can impact on reactor planning and hence utilisation and
yields. Progress continues to be made in addressing major outsource contracts
from current in-house manufacturers serving the wireless sector.

Wafer Technology

At our substrate business, two major customers have substantially increased
their GaAs wafer demand for Q1 2004 and good progress is being made on several
important qualification programmes. As a result, visibility in this area is
beginning to improve.

The overriding objective for IQE Group is to achieve cash flow breakeven, which
is expected by the end of 2004, and to position itself for growth in future
years. With a recovery in many of the sectors served by the Group, we are
taking action to strengthen our sales resource with particular emphasis on the
Asia Pacific Region. In light of aggressive price competition throughout our
industry, the Group continues to exercise tight controls over the cost base.

hlyeo98.
I think you'll find IQE is dollar based, the same as osmetec. With the dollar weakening their cost-base is increasing, ie they're burning dosh.

d.m39/hlyeo98 - i think the exchange rates are an issue but the main cause of the price drop has been a loss of sentiment across the sector as a whole. Last year was a bull run for semiconductor issues and i think after the 2003 results theres been sum profit taking/cyclical movement etc.

I think u need to have a long term view (6 months+)because in the short term there mite not be any news to propel the share price. IQE place a lot of emphasis on confidentiality so we don't hear much.

However IMHO theres a lot to look forward too (outsourching wins, breakeven, strained silicon..).

DYOR